consumption
Deflation continues to press China’s economy
Beijing has been trying to boost consumption in China for a long time. Because while many countries are concerned with inflation, prices in the People’s Republic are not increasing. Why is that?
In the middle of the intensified trade dispute with the United States, China’s economy continues to fight with deflation. As the statistics office in Beijing announced, the consumer price index in March fell by 0.1 points compared to the same month of the previous year. Analysts had not expected any change in advance. As early as February, consumer prices had given in more than expected.
Beijing’s statisticians founded the development with more fresh food on the market through warmer weather and with a lower oil price. Ing-Bank analyst Lynn Song wrote that the index had not made the jump over the zero limit under the existing price pressure. Together with an escalation of the tariffs, there is a suitable time window for the Chinese Volksbank to loosen monetary policy again, he said.
Exchange programs for more consumption
Deflation is the opposite of inflation. This means that buyers get more for their money. Economists consider such development to be harmful in the long term, since companies earn less what can threaten wages and jobs.
China has been fighting with a weak domestic demand for a long time. Beijing was therefore priority for consumption for consumption for this year. At the moment, for example, the government is trying to improve the buying mood against new devices or cars with an exchange program. However, Lynn expected that the measure should not contribute to a higher price level, since it subsidizes consumption with discounts.
dpa
Source: Stern
